STRATEGIC HUMAN RESOURCE MANAGEMENT AND OGANISATIONAL PERFORMANCE: A STUDY OF THE UNIVERSITY ADMINISTRATORS IN CYPRUS

Abstract

Nowadays, organisations are seeking to understand how one of the last truly competitive resources, their human resources, can be managed for competitive advantage (Allen and Wright, 2006). As Wright and McMahan (2011) state, today an organisation’s human resources have become more important than ever to their success. Consequently, a better understanding is needed of the role of HRM in creating better organisational performance. Although, human resource management practices have continued to be the focus of strategic HRM research (Combs et al., 2006), human capital has received little attention (Takeuchi et al., 2007), and human resource behaviours have received even less (Sun et al., 2007). This study theoretically develops and empirically tests a conceptual model that describes how the system of HRM practices is likely to have an impact on organisational performance. Drawing on the Resource Based View, the Behavioural Perspective and the Social Exchange Theory, the study provides a conceptual framework consisting of five constructs through which the underlying mechanisms linking the system of HRM practices and organisational performance are examined. It is proposed that HRM systems improve organisational performance by strengthening human capital and employee attitudes and behaviours (employee commitment). Primary data was collected from public and private universities in the Republic of Cyprus. The empirical analysis investigates the interrelationships between multiple independent and dependent variables that exist in the relationship between the perceived system of HRM practices and organisational performance. The study also intends to test the Resource Based View (RBV) and Social Exchange Theory at the higher education sector, by examining the level of human capital and employee commitment as mediating mechanisms through which a system of HRM practices affects university performance. To analyse the data and test the proposed hypotheses, Multivariate Analysis of Variance (MANOVA) and Structural Equation Modelling (SEM) were employed. Goodness-of-fit measures were utilised to assess the structural fit of the overall model. As the aim of the study was to test and investigate the structural model that explains the relationship between the five constructs, standardised path coefficients and the significance of the hypothesised relationships were utilised to test the postulated hypotheses in a causal diagrammatic form. The results of the analyses revealed that the perceived system of HRM practices has significant positive effects on both, the level of human capital and employee commitment. In addition, the analysis indicated that the level of human capital has significant positive effects on employee performance, while at the same time employee commitment has also significant positive effect on employee performance. Moreover, the impact of employee performance on organisational performance was found to be positive and statistically significant. The analysis also revealed that the perceived system of HRM practices has a significant positive and direct impact on organisational performance. Finally, the relationship between employee commitment and organisational performance is significant and direct. Interestingly, the model indicates no significant direct impact between the level of human capital and organisational performance. The current research can be considered as pioneering in the area of strategic HRM in higher education, since it demonstrates that the simultaneous use of the Resource Based View and the Social Exchange Theory can provide empirical evidence for examining the mediating role of organisational resources (the level of human capital) and employee attitude and behaviour (employee commitment) as well as employee performance at university-level education. In addition, the results of this thesis contribute to the existing body of research and knowledge and provide recommendations regarding the role of the perceived system of HRM practices as an organisational mechanism that may help universities to configure valuable bundles of committed administrative employees who are equipped with high level of knowledge, skills and abilities (KSA’s).